Hotels/Restaurants/Casinos

Caesars Entertainment agrees to buy affiliate in stock deal

Move would better position caesars to restructure $18.4 billion debt load of largest unit

By

MattJarzemsky

LizHoffman

Bloomberg

Caesars Entertainment Corp. on Monday agreed to acquire affiliate Caesars Acquisition Co. in a stock-for-stock merger that will better position the $18.4 billion debt load of its largest unit.

The Wall Street Journal first reported the deal early Monday. The acquisition also will consolidate the parent company’s stake in properties such as Planet Hollywood and Bally’s Las Vegas, online gambling operations and other assets it owns with Caesars Acquisition.

Under the terms of the deal, Caesars Entertainment shareholders will own about 62% of the combined company, while Caesars Acquisition shareholders will own about 38%. Shares of Caesars Entertainment
CZR, +0.31%
rose 9.7% in premarket trading Monday, while shares of Caesars Acquisition
CACQ, +1.59%
surged 11%.

The combined company will have a market capitalization of $3.2 billion, based on Friday’s closing, and a combined cash balance of $1.7 billion, Caesars said Monday. Caesars Entertainment Chief Executive Gary Loveman will maintain the top executive spot at the combined company, while Caesars Acquisition CEO Mitch Garber will join the combined company’s board as a vice chairman.

The deal marks the latest effort by Caesars Entertainment and its private-equity backers, Apollo Global Management LLC and TPG Capital LLP, to shore up the company’s finances after the casino company’s 2008 leveraged buyout. Hamlet Holdings LLC, an entity controlled by Apollo and TPG, has a 66% stake in Caesars Acquisition.

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